ELKHART — Mayor Dick Moore is preparing a new compromise effort after vetoing a Republican-led commercial compact sewer ordinance Friday.
Moore said his decision to veto Republican councilman David Henke’s ordinance is based on advice from a city attorney who believes the ordinance is “illegal, invalid and unenforceable.”
Moore, who has already offered three compromises in trying to end the protracted sewer dispute, expressed dismay Friday, Aug. 16, at the council’s action a week ago when it overlooked his plan in favor of one supported by Republicans and businesses located on the perimeter of the city limits.
“Five members of the city council elected by the people who reside within the city took a stand against the very people they have a duty to represent,” Moore said in a prepared statement. “It has become an incredible, unexplainable stand.”
Moore didn’t give any hint about what type of compromise he might offer, but said it could be ready by early September.
He said he is eager to provide some relief to customers outside of the city, but not one that would cause an unreasonable hardship on residents inside the city.
On Aug. 8, the council adopted Henke’s ordinance that would charge commercial customers outside of the city a 15 percent surcharge for sewer service.
In doing so, the council rejected Moore’s proposed compact plan that would continue the tradition of charging customers sewer fees based on assessed value of their businesses.
For nearly 15 years, The city has charged some commercial customers a fee based on a formula using 75 percent assessed value.
Moore’s plan reduced the formula to 35 percent.
Troubles began in November when the council passed an ordinance that would shift 75 companies from sewer service agreements — charging 300 percent of the city rate — to the compact policy, which is generally viewed as even more costly for users. Sixty-three other companies have been on the compact policy for years.
The council, which will meet Monday, Aug. 19, could attempt an override of the veto. That move would require six votes. Henke’s ordinance passed, 5-4.
Numerous people familiar with the council said they doubt it will be able to override the veto.
At the same time, there is growing speculation that businesses will file a class action lawsuit against the city.
One businessman who is part of the coalition that has opposed the compact fee policy and supported Henke’s ordinance declined to confirm that.
Henke said the chance of a lawsuit is growing quickly.
The battle comes down to Moore’s desire to charge commercial customers outside of the city for sewer service based on the assessed value of their property. Businesses and most Republicans have demanded it be based on usage.
“The class action is a given unless some new legislation is passed that is not based on AV,” Henke said. “The majority of the council have been very vocal about our willingness to amend anything at any number as long as it was not assessed property value based.”
Brian Dickerson, a fellow Republican on the council, picked up on that theme Friday afternoon in a post on Facebook: “No doubt his veto will cost our city taxpayers an exorbitant amount defending his decisions.”
Councilman Dave Osborne, a Democrat, declined to speculate on what type of compromise might attract a winning coalition.
“The mayor could take it down to five percent or two percent assessed value and they still wouldn’t accept it, I don’t think,” Osborne said.
Moore said he was advised the ordinance could be challenged in court because the city has not conducted a rate study or public hearing ahead of adopting the ordinance.
The ordinance was written to delay enactment until Jan. 1 to provide time to conduct a rate study and hold a public hearing.
Moore issued a lengthy statement following the veto and explained the reasons for his decision.
He said the ordinance is not in the best interest of the commercial and industrial interests inside the city and is unfair to city taxpayers.
Such a policy, he said, could result in companies inside the city moving outside of the city.
“It’s an open invitation to locate businesses or factories on the perimeter of the city and an open invitation for those ... already located in the city to move out,” Moore said.
He also said the ordinance would quickly deplete the Greater Elkhart Fund, which is used to pay for trash service, the Lerner Theatre, the Planning Department and numerous other items in the city budget.
Revenues from compact fees are channeled to the Greater Elkhart Fund. Republicans believe sewer revenues should be used to support the utility. Henke suggested the city could borrow from other funds to cover those expenses until increased property tax revenues from coinciding annexation begin to be collected.
The veto came one day after Moore and a city attorney attempted to learn the name of the attorney who Henke had draft the legislation. The move was done with a public records request, but Henke claimed he limited interaction with the municipal attorney to protect his identity and had very little information to turn over to the city administration.
Henke said he doesn’t have permission to reveal the attorney’s name.
Henke contends Moore wanted the name for retaliatory purposes. Moore and city attorney Vlado Vranjes said they wanted to contact the attorney to discuss the legalities of the ordinance.
Henke turned to an outside attorney after Vranjes declined to assist in reviewing the ordinance while it was still being prepared. Vranjes contends he works at the pleasure of the mayor, but Henke argues he should be willing to assist the council since he is paid with city tax dollars.
A lack of willingness to sit down and negotiate appears to be continuing.
Osborne said Moore plans to meet with he and three others who supported Moore’s plan to discuss a possible compromise.
Henke said he would prefer the mayor negotiate directly with all council members.
The dispute over the city’s compact sewer policy has become the most contentious issue in the city in recent years and has left Moore frustrated despite three efforts on his part to compromise. His latest plan was based on recommendations from a task force he assembled.
As the controversy began to grow earlier this year, Moore agreed to set aside the ordinance passed in November. In doing so, the city agreed not to collect compact fees until a resolution was found.
As a result, the city has been delayed in collecting $655,000 in compact fees from the first eight months of the year.
Moore also points out that his plan, which would have been phased in over three years, would have provided almost $4 million in pre-annexation fee relief over a three-year period.
“This never should have happened,” Moore said in his statement. “If the mayor had the authority to issue an executive order that would reduce the fee to 35 percent, he would do that today.”
Veto News Release